Should I Put My Car in My Trust? Tips for Arizona Estate Plans that Avoid Probate
When setting up a trust as part of your estate plan, you might wonder whether you should title your vehicle in the name of your trust. As many people know, having a revocable living trust is an important part of your estate plan to hold title to or be the beneficiary of your house, investments, and life insurance policies. While trusts are fantastic for avoiding probate and making asset transfers easy, cars are a unique case—especially in Arizona. Read on to learn five important considerations before you go through the hassle of transferring your car into your trust.
1. Liability Risks: Does a Trust Increase Your Exposure?
One of the biggest concerns when putting a car in a trust is liability. If a car is titled in the name of your trust and an accident occurs, the trust itself could be sued. This can be problematic. Additionally, tipping off the other driver’s attorney that you cared for your assets enough to create a trust might make them wonder if they can sue you for more than your insurance policy coverages.
That being said, proper insurance coverage can mitigate this risk. If your car is in a trust, your insurance policy should explicitly list the trust as an insured party. This is an extra administrative step but very important. Working with a reputable insurance agent and reviewing coverages frequently is so important, especially if you are going to put your vehicle in your trust.
2. The Hassle of Retitling Every Time You Buy a Car
If you buy a new car every few years, you’ll have to go through the tedious process of retitling it in the name of your trust each time. This means:
- Extra paperwork at the dealership or DMV
- Possible delays in financing approval if you have a car loan (more on that below)
- Updating your insurance policy to reflect the trust ownership
For many people, this extra work isn’t worth the minimal estate planning benefit, especially in Arizona, where probate concerns for vehicles are minimal (more on that in a bit).
3. Updating Your Insurance Policy: A Necessary Step
If your vehicle is in a trust, your insurance policy must be updated to reflect the trust as an additional insured party. This is often overlooked, and if not done correctly, it could create issues with coverage in the event of an accident.
Many insurance companies allow this easily, but some might require additional paperwork or even a new policy structure. If you forget to make this change, this could impact your claim and policy coverage.
4. Do you have a Car Loan? Your Lender May Not Allow It
If you have a car loan, transferring ownership to a trust can be tricky. Many lenders don’t like vehicles to be titled in the name of a trust because:
- The trust isn’t a person, so it complicates repossession if you default.
- Some underwriters won’t approve the transfer, meaning you may need to pay off the loan before retitling.
5. In Arizona, Your Car May Not Need to Be in Your Trust Anyway
One of the biggest reasons people put assets in a trust is to avoid probate—but in Arizona, a car doesn’t necessarily have to be in your trust to avoid probate.
Arizona law allows a small estate affidavit to transfer a vehicle outside of probate if the total value of the non-probate estate is under $75,000 for personal property. Since most cars fall below this threshold, an heir can transfer ownership without going through probate simply by filing a form with the Arizona Motor Vehicle Division (MVD).
If your car is your only non-trust asset, your estate may still qualify for a simplified non-probate transfer process. This makes the extra hassle of retitling and updating insurance unnecessary in many cases.
So, Should You Put Your Car in Your Trust?
For most Arizona residents, the answer is no. The drawbacks—extra paperwork, liability concerns, potential financing issues, and insurance complications—often outweigh the minimal estate planning benefit. Given Arizona’s relatively simple vehicle transfer rules, leaving your car in your personal name is usually the smarter and easier choice.
That said, if you have unique concerns—such as multiple high-value vehicles or a specific estate planning goal—you may want to consult an Arizona estate planning attorney to discuss the best approach.
Need Help with Your Estate Plan in Scottsdale or Peoria, Arizona?
If you’re unsure whether to put your car in a trust or need help setting up an estate plan that protects your assets while avoiding unnecessary headaches, we’re happy to help. Kristin Moye and Colton Powell are experienced Arizona estate planning attorneys and we loving helping clients around the valley in our Scottsdale, Peoria, or Mesa offices to create your trust, will, and comprehensive estate plan for your family.
Contact us today for a consultation!